Edina's Regis to sell remaining 3,108 company-owned hair salons

The haircare company will go to a fully franchised portfolio.
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Edina-based haircare company Regis is selling the remainder of its company-owned salons to franchisees.

The decision was announced on Tuesday as the company reported its 4th quarter and full-year operating results, with the remaining 3,108 salons still owned by the corporation soon to shift into the hands of franchisees.

The company had already sold 764 of its 7,145 total salons to franchisees this year, and noted that its company-owned salons had seen a 4.3 percent reduction in revenue this year.

"Given the success to date of the Company's effort to profitably sell and convert company-owned salons into its franchise portfolio, the Company has reached the decision to fully franchise its remaining company-owned portfolio of salons," the company said in a press release.

It contends that the move will result in a bigger return on the company's capital, result in a simpler business model that provides a "platform for sustainable organic growth," and put responsibility for the salons into the hands of owners who can offered a "more localized service experience."

The change will also allow Regis to cut the number of other salon brands it has from more than 50 currently to just five: Supercuts, SmartStyle, Cost Cutters, First Choice Haircutters, and Roosters.

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Hugh Sawyer, Regis CEO, said: "After more than two years of carefully planned evolution we have identified and confirmed a compelling vision for Regis as a capital light, high growth, technology enabled franchise company.

"Although the transition to a capital light franchise model will initially have a dilutive impact ... we are convinced that a fully franchised business that generates a higher return on its capital will prove to be in the best long-term interests of our shareholders."

Regis says it'll take 18-24 months for the transition to completely franchisee-owned salons to be completed.

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The new Chief Operating Officer told the Star Tribune the Edina-based company will close less than 10 percent of its 7,500 company-owned stores. An exact figure or locations were not disclosed. Regis also plans to eliminate half of its 50 brand names and convert most of the affected salons. The struggling company wants to reduce costs and simplify its business model.

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For Edina-based Regis, the deal will help it concentrate on its core salon businesses which include Supercuts and MasterCuts. The company also shed some other non-core assets of late, the Star Tribune points out. In April Regis announced that it was selling its minority stake in Europe's biggest hair salon company, Provalliance.